Introduction
The landscape of workplace law is undergoing significant change, as amendments to the Fair Work Act 2009 (‘the Act’) by the Fair Work Legislation Amendment (Closing Loopholes) Act 2023 and Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 progressively come into effect. The changes include higher penalties for non-compliance, redefining serious contraventions of the Act, and making intentional wage underpayments a criminal offence. Employers need to be aware of these changes to avoid hefty financial and serious legal consequences.
Changes in Maximum Civil Penalties
Starting on 27 February 2024, the maximum civil penalties for certain contraventions by employers not classified as small businesses will increase considerably. Employers can face penalties of up to $469,500 per contravention, with a staggering $4,695,000 for serious contraventions. Additionally, contraventions associated with underpayment can result in penalties equivalent to three times the underpayment.[1] Furthermore, failing to adhere to compliance notices will now attract penalties of up to $18,780 per contravention for an individual or $93,900 per contravention for a company, double the previous amounts.
Redefinition of ‘Serious Contravention’
As of 27 February 2024, the definition of a ‘serious contravention’ under the Act has undergone a crucial amendment. Previously, it was necessary to prove that a breach was part of a systematic pattern of conduct but now it only requires that the contravention was done either knowingly or recklessly.
Criminalising Underpayments
As from 1 January 2025 or the Voluntary Small Business Wage Compliance Code is approved, whichever is the later, it will be a criminal offence to intentionally under pay employee entitlements under the Act or fixed under modern awards or enterprise agreements. ’Wage theft’ will be punishable by fines or imprisonment. The prosecution will need to demonstrate beyond reasonable doubt that the employer intentionally engaged in the act or omission resulting in wage underpayment. Accidental, inadvertent, or genuine mistakes leading to underpayment will not be subject to criminal sanctions but may be subject to civil penalties.
Conclusion
In light of these changes, employers should review their payroll practices and ensure wages and other entitlements are paid in line with the Act and any applicable modern awards and enterprise agreements. Seeking legal advice from experienced employment lawyers as a proactive measure can safeguard against potential liabilities and loss of reputation.
To discuss your particular situation, please contact our workplace relations & employment law team on 03 9614 7111 or melbourne@nevettford.com.au.
[1] Penalties calculated by reference to the amount of underpayment will commence on or after 1 January 2025, at the same time as the new criminal offence for intentional wage theft.